Dish Network makes $25.5B bid for Sprint

(USA Today) -- DISH Network said Monday that it wants to buy Sprint Nextel for $25.5 billion, topping a $20 billion merger proposal already on the table from Japan's Softbank.

Attesting to the attractive value of wireless airwaves, or spectrum, that Sprint holds and the anticipated growth of mobile data usage in the U.S., DISH is raising the value of Sprint six months after the Japanese wireless carrier submitted its surprising bid to enter the U.S. market.

DISH is offering Sprint shareholders $17.3 billion in cash and $8.2 billion in stock. Sprint shareholders would receive the equivalent of $7 per share, based on DISH's closing price Friday. That consists of $4.76 per share in cash and 0.05953 DISH shares for each Sprint share.

DISH says its proposal "represents a 13% premium to the value of the existing SoftBank proposal."

"The DISH proposal clearly presents Sprint shareholders with a superior alternative to the pending SoftBank proposal," said Charlie Ergen, chairman of DISH Network. "Sprint shareholders will benefit from a higher price with more cash while also creating the opportunity to participate more meaningfully in a combined DISH/Sprint with a significantly enhanced strategic position and substantial synergies that are not attainable through the pending SoftBank proposal."

U.S. regulators are reviewing Softbank's proposal to buy a 70% stake in Sprint Nextel for $20 billion, which is the largest corporate acquisition offer by a Japanese company.

DISH's Ergen said he's pursuing the merger to broaden DISH's business by offering integrated bundle packages of broadband data, voice services and home video that can be played at home or on the wireless network.

"Additionally, the combined national footprints and scale will allow DISH/Sprint to bring improved broadband services to millions of homes with inferior or no access to competitive broadband services," Ergen says.

DISH estimates the merger would result in about $11 billion in cost savings.

It plans to fund the $17.3 billion cash portion of the transaction using $8.2 billion of cash already on its balance sheet and additional debt financing.

"You can always rely on Ergen to stop a party. He's a disruptive force in the telecom and TV industry," says Roger Entner, a telecom analyst at Recon Analytics. "He needs to have a partner in the wireless world to make his investment in his wireless spectrum worthwhile."